If you are thinking about a career in
the mortgage industry as a loan officer, the following
information should provide you with some background details
about what to expect from this career choice.
The job of a loan officer is to educate and guide borrowers
into a mortgage that accomplishes their financial goal, and
then provide support for moving the loan process to a
completed transaction. A
typical day involves talking to potential borrowers on the
phone, or in person, conveying how they can provide a mortgage with competitive interest
rates, closing costs, and funding in a timely manner.
Once a borrower decides to choose a particular company, the loan
officer begins by completing an application with the borrower,
collecting copies of the required documentation, and
confirming that the borrower fits into the qualifying
guidelines based on credit, employment, debt ratio, and the
preliminary loan to value. The file is submitted to a loan
processor, who opens escrow, orders a title report, and sends
out disclosures and requests for employment and other
verifications. The loan officer usually orders an appraisal,
and follows up with the borrower for any necessary paperwork.
The loan file is then submitted to an underwriter, who either
approves, or declines the mortgage. Approvals typically have
conditions that the loan officer and processor are responsible
for getting signed off. An appointment is made for the
borrower to sign their loan documents, and the loan is set up
to fund and record after all of the underwriting conditions
have been met.
There are two general categories for
loan officer positions, either as a company employee, paid on
a W-2 tax form, or as an independent agent, paid on a 1099
Advantages of an employee loan
officer may include: health insurance benefits; a retirement
plan; possible base salary; sales commission or bonus pay; the
company pays half of the social security tax; the company
usually provides advertising or mortgage leads; and
opportunity for promotion.
Some possible disadvantages of an
employee position can include: having a strict, or
bureaucratic structure; work activities, computer time, and
phone usage may be monitored by management; a monthly sales
quota must be maintained; and being anchored to an office
cubicle every day.
There are a number of mortgage
companies who will work with loan officers on a virtual, or
net branch basis, to provide the mortgage programs, loan
processing, and funding capability. These independent loan
officers have the advantage of earning a higher sales
commission for each loan funded, and the flexibility of
working their own hours, at a location of their choice,
without any monthly sales quotas, and no company managers
monitoring work activity or performance.
The disadvantages of working
independently include: commission only, with no salary; health
insurance is not provided; loan officer pays full social
security tax; no opportunity for promotion; isolation from
co-workers; must pay for all advertising or mortgage leads to
The majority of loan officer jobs are
found in the residential market for the purchase of
new or resale homes, refinancing, and
home equity loan products. Employers include banks, credit
unions, mortgage banking companies, and mortgage brokers.
Commercial loan officers derive their mortgage business from sources
such as: commercial real estate companies, corporations, and
investors who purchase or refinance real estate for
business or investment, including office buildings,
apartments, retail centers, and industrial property.
The earning potential of a loan
officer can range from about $50,000 to $150,000 per year,
which can depend on many factors, such as: the economy,
interest rates, number of new and resale homes sold, home values,
commission split, number of sales leads, quality of leads, and
sales ability. The industry has frequent business cycles, and
a high turnover rate, but can be financially rewarding.